news - FMO supports lending to Zimbabwe’s SME sector

Development financial institutions FMO of the Netherlands and Swedfund of Sweden have agreed to provide NMB Bank with a $15 million line of credit for lending to small and medium enterprises (SMEs). FMO’s part of the loan is funded through the MASSIF Fund, which is managed by FMO on behalf of the Dutch government.

FMO, which is partly owned by the Netherlands government, and Swedfund, which is the Swedish Government’s Development Finance Institution, signed the loan agreement with NMB Bank yesterday (26 September) at a ceremony in the Netherlands.

The line of credit, which is for four years, is intended to enable NMB Bank to provide much needed support to Zimbabwe’s SME sector. The bank will particularly target specific groups by, for instance, lending to small or medium sized businesses run by women.

NMB Bank Chief Operating Officer Gerald Gore, who signed the agreement on NMB’s behalf, said the line of credit should help promote Zimbabwe’s economic growth, given the importance of SMEs to the country’s economy. “We are excited about this development,” he said. “It will certainly go a long way in supporting economic growth in the country.”

“SMEs are the backbone of the Zimbabwe economy and as NMB we have been aggressive in sourcing cheaper and long-term finance to support this critical sector of the economy,” Mr Gore said. “Further, the line will also provide the much-needed nostro funds to support critical imports by our customers,” he added.

“We see this loan as a great way to support NMB and particularly their important work to target SMEs, with special focus on businesses run by women. Job creation and inclusive growth will be crucial for coming development steps in Zimbabwe”, Anna Ryott, CEO of Swedfund said.

NMB Bank has been leveraging on its strong foreign shareholding to access lines of credit, mostly from foreign development financial institutions (DFIs). FMO is one of the shareholders in NMBZ, the holding group that owns NMB Bank.

Recently, FMO and Norfund, which is also a shareholder in NMB, decided to form a partnership with Rabobank, a Dutch bank. These three entities will, through the creation of a new entity Arise, combine their investments in Africa. That means that their shareholding in NMB will be taken over by Arise, when it will become operational on January 1 next year. The partners are committed to strengthen and develop effective, inclusive financial systems in Africa.

Arise will have a presence in 20 African countries. Capital will be allocated to support current investee companies as well as new minority investments in the market. “FMO has been supporting NMB for the past five years and we are excited to have Swedfund join them for this syndicated loan,” Mr Gore said.

Linda Broekhuizen, Chief Investment Officer of FMO, said: “The role of SMEs is crucial to economic growth. Through this transaction, FMO aims to further strengthen their position within Zimbabwe. It also shows our long-term commitment to NMB, a well-respected client of FMO.”  

Besides FMO and Norfund, other NMB shareholders of note include AfricInvest of Tunisia, African Century of the United Kingdom and Old Mutual, which together with FMO and Norfund own about 60 percent of the bank.